What to Teach Your Kids About Money, and When You Should Do It

A solid education is important for kids. But while you’re busy making sure their reading and math skills are up to par, don’t forget to teach them about money, too — it could keep them from falling into bad habits later on.

Back in November, President Obama and his top financial advisers were given a blueprint detailing what kids should know about money and when. The document has thousands of pages, but don’t worry — you don’t have to read them all.

As part of her work for the Youth Subcommittee of the President’s Advisory Council on Financial Capability, Beth Kobliner, author of ‘Get a Financial Life,’ prepared a summary paper — and the milestones she lists could eventually carry a lot of weight with educators and others in the financial education field.

Here’s what she recommends for various age groups:

Ages 3-5: A child should learn that money is needed to buy things and that money is obtained by working. He should also know the difference between “need” and “want,” and that immediate gratification is not always the smartest choice.

Ages 6-10: Kids should know they must make choices about how to spend their money and that it’s important to search for the best deal. They should also be taught about the dangers of sharing too much information online, and that putting money in a bank account will protect it and earn interest.

Ages 11-13: This is a good age to teach children about saving. Tell them it’s smart to save 10 percent of what they earn and that the earlier they save, the more money they’ll have down the line. It’s also an excellent time to start talking about credit cards and how they can owe more if they don’t pay their balance each month.

Ages 14-18: Teens should have an understanding that college can cost a lot of money and that a school and loans should be chosen based in part on career goals. Kids this age should also be told not to use credit cards for things they cannot afford in cash. In addition, have a discussion about payroll taxes and the difference between gross pay and take-home pay, and let them know a great place to save and invest is a Roth IRA.

Ages 18 and up: Young adults should understand that credit cards shouldn’t used unless the balances can be paid off every month, and the importance of always having health insurance. Also, let them know about the importance of diversified investments and that they should pay attention to the costs associated with various investment products.